Several mainstream giants have made significant sourcing changes, reflecting a shift that may cause more companies to reconsider their supply chain models in the second half of 2008.
This spring, Liz Claiborne Inc. decentralized its sourcing, giving each of its more than a dozen brands control over its own manufacturing decisions, while creating a centralized sourcing leadership team. After taking over Kellwood Co. at the beginning of the year, Sun Capital Securities Group LLC shuttered the vendor's Hong Kong-based sourcing operation, Kellwood Trading Ltd., to consolidate and outsource its manufacturing to Li & Fung Ltd. Tommy Hilfiger sold its global sourcing operations last year for $247.8 million in cash to Li & Fung, which has plans to nearly double its business by 2010.
"Sourcing today is more complicated than ever," said Rick Darling, president of Li & Fung USA. "Sourcing can't be just good — it must be great to deal with the six or seven remaining retailers."
Sourcing costs are increasing by as much as 20 percent, as the Chinese economy develops and workers demand higher pay. The Chinese government is also making a concerted effort, partly through eliminating tax incentives, to move the low-pay manufacturing industry out of the lucrative coastal regions where 10,000 to 15,000 factories have closed since the Chinese New Year on Feb. 7, Darling said. For Darling, the answer isn't moving to lower-wage countries such as Bangladesh, Vietnam or Cambodia, as much as moving to other parts of China.
The weak dollar only exacerbates costs for U.S. companies manufacturing in China, many of which report that Chinese factories won't provide them quotes on costs until the final order is made because of currency fluctuations.
These sourcing cost increases couldn't come at a worse time for vendors. Between rising prices for gas and food and devaluations of home prices and stock portfolios, mainstream consumers are more cost conscious than ever. Vendors will likely find it tough to pass on the price increases and still get full price at retail — all of which will force mainstream manufacturers to look for ways to optimize their sourcing, whether that means outsourcing or realigning their supply chain.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews